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Senators Mike Lee and Ted Cruz have thrown out their fix to pull the Senate Health Bill across the finish line, the “Consumer Choice Amendment.” As described by the Daily Caller:

The amendment, known as “Consumer Choice,” allows insurers to sell plans that do not follow regulations created under Obamacare for patients with pre-existing conditions, with the caveat that insurers have to sell at least one plan that adheres to Obamacare’s mandates. The proposal would allow insurers to sell cheaper plans with fewer benefits.

That’s all well and good, but it sounds like a ploy to simply get the Senate health bill passed, not to actually fix the wreckage in the independent health care market caused by Obamacare. One doesn’t have to be a medical policy analyst to see that an insurance market with one Obamacare compliant plan and all the others free of such restraints will cause a flow of premium dollars away from the one Obamacare compliant plan, making it unaffordable. Unless you have a pre-existing condition, why would you want such a plan?

So this plan doesn’t actually fix the independent insurance market, it ghettoizes the Obamacare plans. I’m unclear if the Obamacare plans become so expensive that the insurance companies have to subsidize them increasing the premiums and out of pocket expenses on every other plan they offer in the state, or if they just give up and continue the current process of bailing out of state exchanges as each state becomes unprofitable; the current “death spiral” trend. In any case, the health care market gets worse and death spirals the Republicans right out of office, leaving the Democrats to craft their own gimme-free-healthcare bill.

So what to do? Is healthcare really so intractable that there is no solution? I don’t think so, and Republicans used to understand the issue much better than they apparently do now. Republicans used to have all kinds of health reform plans, none of which look anything like the current Better Reconciliation Act.

So here are a couple suggestions that together I think would make a pretty good GOP replacement bill, but first, Republicans are going to have to come to terms with two fantasies that dominate the health care debate:

The health bill can’t be a tax cutting bill. Republicans want to get rid of a lot of the Obamacare tax increases, and it’s true that many of them were pretty poorly thought out, but we’re not going back in time to 2009, we’re stuck with the conditions that Obamacare left in the health care market and the expectations that people have from their healthcare plans. The taxes can be rejiggered any way you want, but it should remain revenue neutral.

The Medicaid cuts can’t be part of the bill. I get what the House and Senate are trying to do, and I have to raise a glass to their under cover of darkness attempt to do something about one leg of our multi legged stool of entitlements that are crushing our long term budgetary outlook. I’ve seen barely a mention in the media (too busy chasing Russian ghosts I guess) of the fact that the Republicans are trying to remove Medicaid as an entitlement program by limiting its federal contribution, pushing ever greater costs, as well as the freedom to design their own programs, to the states. But that has sabotaged doing anything else with healthcare. If that’s something that can be put down in a reconciliation bill then it’s something the Democrats can easily change the next time they’re in power, so why waste political capital on a plan that can (and will) be totally reversed with 51 Democratic votes?

Now on to the suggestions! Many of these I’ve made previously but not under a single list and probably requires a full repeal of Obamacare, but anyway…

A. Tax Credits available for purchasers of independent health insurance plans that are actually equivalent as a consumer to the employer health plans being covered by private companies. And that would be pricy, something along the lines of a $5000.00 tax credit for individuals and $10,000.00 for families. This would come close to paying about two thirds of the premium cost of the average group plan.

B. But wait you ask, that doesn’t do anything about medical inflation, that encourages people to seek out the most expensive plans they can afford with their tax credit. Not so fast… Any leftover amount from their tax credit would be rolled into a Health Savings Account (HSA). So say you find a family plan that only costs $8,000.00 per year, and then $2,000.00, the balance of your unspent tax credit, can be rolled into an HSA account to be used to pay co-pays, and deductibles. That’s a big incentive to be a smart consumer.

C. Of all of the Obamacare Mandates, the one on Preexisting Conditions is the most popular, and the one that is most likely to survive in any future health bill. I’ve already described in detail how to have pre-existing conditions paid as a secondary payer via Medicaid.

D. The other Obamacare mandates are mostly idiotic. Pediatric dental care? Come on! But none are probably more idiotic the requirement to cover “children” up through age 26. Of all the mandates, that probably had more to do with the collapse of the Obamacare exchanges than any of the others since they took the young and healthiest group out of the exchanges and put them mostly under their parent’s employee group plans. That should simply be reduced to 21 or 22. Otherwise it mainly benefits upper class kids in graduate school. However I recognize that there are constituencies for all kinds of nonsense, so to borrow from Cruz and Lee’s amendment, require that each state have one plan that has one of those mandates. Let there be one plan that really does have pediatric dental care, and if you really want that, that’s the plan you get. I think the market would provide those options anyway, but one mandate per plan, rather than all of the mandates in one plan, like the Consumer Choice Amendment has, should be affordable. Of course the priciest mandate, for Pre-existing conditions, would be applicable to all plans but wouldn’t affect the price because they would be covered by the secondary payer.

E. Of course the media and CBO crying jag over people losing their health coverage due to the elimination of the Medicaid Expansion can be avoided by simply allowing those currently under Medicaid Expansion to keep their plans. I elaborated on this back in June, but if the 14.5 million people currently covered by Medicaid Expansion know they won’t lose their plans (even if no new people are added to the program) that takes a lot of wind out of the sails of the opposition, and as I noted last month, those numbers will only decline over time.

F. There are other smaller fixes that will help things, many of which I’ve mentioned before, but are not by themselves game changers, such as:

A federal cap on non-economic malpractice damages.

Allow purchasing pools of small employers and nonprofit associations and clubs (think the Elks Club).

Allow consumer purchase of health insurance across state lines. There is some question on whether this will actually increase competition and reduce prices but hey, we allow it for employer health plans, so why not?

Allow doctors and other health providers take a tax deduction for indigent care. For some doctors, taking a deduction on the cost of service based on Medicare rates might be a better value than simply being paid for the service with Medicaid rates.

It’s not a fully realized health bill, but I think it’s a good outline that most of the right could agree with. If not this, it has to be something, and I mean something that won’t continue to wreck the health care market like the current House and Senate versions will. The clock is ticking.

I had hoped that the Senate, toiling away in secrecy, would toss out the crap sandwich of the House bill and replace it with something shiny and new that I could really get behind.

No such luck. The “Better Care Reconciliation Act of 2017” is mostly the same crap sandwich, with some of the crust trimmed off. As I wrote about the House bill last month, this bill, or something like it, would wreck healthcare and ensure Democratic ascendency, in the same way that Obamacare strip mined the Democratic majority in the House and Senate.

It’s not quite a total loss. It did move in the right direction to fix some of the problems I had pointed out in the House bill, such as restoring tax credits based on income rather than age (I never got an explanation for that). But of course it fell far short of providing reasonable tax credits.

As for pre-existing conditions, the main issue that tortured the public discussion of the House bill, the Senate appears to have just given up and is keeping the Obamacare requirement. So after all the trouble, when it comes to pre-existing conditions, it’s Obamacare after all.

Although there’s no CBO score on the bill yet, it will probably come out similarly to the House Bill since it keeps much of the same structure for slowing Medicaid Expansion and although I’ve already criticized the way the CBO score was arrived at, it won’t matter in terms of a Democratic talking point; 26 million will lose their healthcare. You’ll hear it all over cable news until the vote, then in campaign ads for the 2018 election.

How to solve this issue? Here is the difference between politicians and regular people; I can conceive of a fairly simple answer that would never occur to a professional, and it’s not one I’ve yet heard either in public policy articles or blathering about on cable news.

Consider: There are about 14 and a half million people covered under the Medicaid expansion from Obamacare. You can criticize Medicaid all you want in terms of studies on health outcomes or availability of providers, but if you’re on it, it’s free (to you). There are no premiums, deductibles, or copays. So even if you provide market alternatives to that, none of them are going to be as cheap to the patient as free Medicaid is. People being kicked off Medicaid will generate stories for years for the Democrats. There will be no end to the number of hard luck stories (and the children! Think of the children!). That will fill nightly news and newspaper stories for years to come.

So just let those people keep Medicaid.

That’s it. No complicated policy issue or complicated public/private program. Just allow the people who are currently covered by the Medicaid expansion, as long as they meet their income eligibility, keep their Medicaid healthcare. It’s not a new entitlement since it won’t be open to any new applicants; it will just cover those who currently have it. Eventually those numbers will shrink, either by people improving their lot and exceeding the income eligibility, or worst case, aging into Medicare.

Will it cost money? Yes, but frankly, the Republicans seem to be under some sort of delusion that they can turn health care into a tax cutting bill. I don’t see how that’s realistic. At some point they are going to have to realize that the bill is going to have to be revenue neutral.

More importantly, this buys time to fix what’s ailing in the individual insurance market. Obamacare has wrecked and nearly destroyed the individual insurance market and I don’t think that’s going to be fixed on the day of a bill signing. This will probably take years, so the fewer people in that market, to buy time and give reforms time to work, the better

The CBO score for the House Republican health bill came out last week and the news is “unexpectedly” bad: 14 million more people uninsured next year and 26 million by 2026. These numbers are crap of course. Not just because the CBO is notoriously wrong (remember their rosy predictions about Obamacare?) but because their comparisons are not based on reality. As the Legal Insurrection site notes, the CBO used a March 2016 baseline that they had previously acknowledged was wildly inaccurate. With health plans dropping like flies from Obamacare exchanges all over the country, if you do nothing, you’re likely to get a similar result of increase in uninsured by 2026.

But the purpose of the CBO report wasn’t to provide a statistical analysis of the possible effects of a healthcare replacement plan, it was to provide talking points to the Democrats, and on that basis, mission accomplished. And that’s why Mitch McConnell is trying to stall bringing up the healthcare bill in the Senate for as long as possible. It’s a policy, political, and PR nightmare.

But the real nightmare in the health care debate boils down to the one issue that actually frightens people, stirs them to show up to town halls, and dominates the cable news coverage of health care policy is pre-existing conditions. How to handle pre-existing conditions occupied the majority of debate on the House plan, and ultimately failed to satisfy. The AHCA has planned to handle pre-existing conditions through high risk pools. The way they are supposed to work is that people with pre-existing conditions would sign up for their health plans like normal, but money set aside in high risk pools in each state would go to subsidize the insurance companies directly for each customer with pre-existing conditions. This was based on a highly successful program in Maine. The problem with rolling that out nationwide is that we have no good way to estimate either the costs per person or the number of people involved.

Our guide to how little we know about the pre-existing population lies in an Obamacare program called the Pre-Existing Condition Insurance Plan (called either PPACA or PCIP). PCIP was set up to provide health insurance as a bridge until the requirement for individual health plans to accept everyone, regardless of pre-existing conditions, kicked in. The assumptions were wrong both in number of enrollees and how much they would cost. The original cost estimate per enrollee was $13,026.00 and in only 11 months was upgraded to $ 28,994.00 per enrollee. And how many people are affected by pre-existing conditions? Up to 130 million people according to most government estimates. So how many were actually enrolled in the PCIP program? At its peak, there were never more than 114, 959 enrollees. So the entire US health system was re-arranged to accommodate a little more than 100,000 people. Interestingly 78% of PCIP spending went to only four conditions, cancer, heart and circulatory diseases, post-surgical care, and joint diseases.

So there is a major gap between pre-existing conditions, the propaganda talking point, and pre-existing conditions, the actual policy issue. And these lead me to notice some curious conservative commentary on the issue. Prior to the House vote, columnist Anne Coulter wrote a column about the House bill in which she made the remark, “Until the welfare program is decoupled from the insurance market, nothing will work.” But the biggest player in the conservative pundit class is radio host Rush Limbaugh. With a 20 million person radio audience, he can move or set the agenda among the right. So what are Rush’s views on pre-existing conditions? He spent quite a bit of time discussing the issue on his show after the House vote, but what caught my eye was this:

“What ought to really happen here is, the simplest way, is to take whatever the percent, 4% who have preexisting conditions and designate them as a special class who are going to have medical expenses covered by some funding mechanism that may be part of the overall bill or not, but don’t commingle these people with the genuine insurance that’s going on elsewhere. ‘Cause then we’re not talking insurance. And it does matter because that’s the way they’re able to convert this into a massive welfare bill while everybody thinks it’s insurance. It’s another sleight of hand.”

To me, it sounds like both commentators are arguing that pre-existing conditions should be handled outside the normal insurance system and covered by a government program. I think this shows a movement that’s removed from where the House Freedom Caucus is on the issue. The problem is that no one in the Republican Congress will squarely address the issue. Putting together a bill to replace Obamacare would be much simpler if they just came out and admitted that people with pre-existing conditions should be served outside of the insurance market.

In other words, a government program.

I had addressed various health reform proposals in general and pre-existing conditions in particular 5 years ago during the Obamacare court fight. At the time I addressed two major issues that needed to be in a future health reform bill:

Tax Credits and deductions to cover the costs of insurance premiums in the individual insurance market.

Some manner of dealing with pre-existing conditions, preferably by some sort of 2nd payer coverage.

I thought I would expand on just how I would cover pre-existing conditions if I were writing the bill. As stated I would pay charges related to pre-existing conditions with a second payer plan; I’m thinking Medicaid. But first, some background:

Second payers are plans that pay in addition to regular insurance plans. People most commonly run across them in Workers Comp and Auto accident issues. For example, you’re in a car accident, and are taken to the emergency room. Normally an emergency room visit and associated treatment and tests would be paid by your regular health insurance, but because you have auto insurance and in an auto accident, your auto insurance would be billed first. The auto insurance pays whatever they are contracted to pay in those circumstances, and the bill goes to your health insurance, which pays whatever it’s contracted to pay minus what was paid by the auto insurance.

Now years ago, some HMO plans would pay for pre-existing conditions, but not right away. You are a new member on an HMO plan, but you have diabetes. You could use your insurance for any medical condition except the procedure codes and diagnosis’s associated with diabetes for a period of time, either a year or two years depending on the plan. After that period was over the HMO would start picking up the costs of diabetic treatment. This way, the health plan didn’t immediately go into the hole over a brand new member who brings expensive health issues to the plan. Obviously, this isn’t great at all if you have diabetes because it means you are paying for all of your diabetic treatment and medicines out of pocket until your waiting period was over. For many however, it was better than no insurance at all.

So how would my plan work?

When you sign up for a health plan on the individual health insurance market in your state, part of the application process is identifying if you have a pre-existing condition. If so, you are automatically signed up in your state’s Pre-existing Medicaid plan. This is a secondary payer that only pays if during your first two years in your health plan (or whatever time period is arrived at) you have charges related to your pre-existing condition. So, let’s say you have heart disease as a pre-existing condition, you go to the doctor for some issue related to that, the doctor files insurance like normal, and it goes to your insurance company.

Since you’re in the first two years of your health plan with this insurance company, and the procedure codes and diagnosis codes are related to your known pre-existing condition, your insurance company denies the claim but then sends it to your state Medicaid, which processes and pays the claim. For you, the process is seamless, your insurance company gets out of paying charges, and Medicaid pays the doctor.

So, why do I think this is better than the currently proposed high risk pools in the AHCA?

First, we don’t know what the costs are going to be and who is going to need help. That was the problem with the Obamacare PCIP; far fewer people signed up than expected, but it cost way more per person than expected when they did sign up. So there are a lot of unknown costs associated with this.

Secondly, under high risk pools there seems to me a thin line between subsidizing patients with pre-existing conditions and subsidizing health insurance company profits. Are the insurance companies just going to present a bill to the high risk pools and they will just pay no matter what? Who knows? There isn’t any transparency in knowing what you’re paying for so you can never predict what the costs are.

Third, Medicaid pays out under the cheapest rates available, cheaper than Medicare and far cheaper than private insurance rates. If the government is going to subsidize pre-existing conditions somehow, why not do it in the way that provides the cheapest rates, and the most transparency? Medicaid will be able to grow a database of all pre-existing conditions, their frequency, and their costs for the private insurance market.

One way or the other, the government will be paying for this. Either the Senate puts together a plan that the President signs, or Obamacare continues to fall apart and a new Democratic Congress will be elected to fix healthcare, and if they do it, given previous experience, it won’t be cheap, transparent, or voluntary.

One would think that last week’s passage of the Republican version of the American Healthcare Act, the bill to “repeal and replace” Obamacare, would be met with jubilation on the right. Instead it’s been met with a mostly “meh” attitude. Unlike Obamacare, which Democratic activists enthusiastically defended every step of the way, Republican activists aren’t happy with this bill. When the bill is taken up in the Senate, they are likely to be even less happy. Probably the only positive feature that Republicans will agree on is that it’s likely to be better than Obamacare.

Allows states to get waivers to the old Obamacare coverage requirements

Blocks Planned Parenthood payments for one (?) year.

Stops and begins the rollback of the Medicaid expansion.

Changes Medicaid from an entitlement to a block grant.

If, through some miracle, this bill were to sail through the senate unscathed, and become law as currently written, it would destroy healthcare in this country and do to Republicans what Obamacare did to Democrats; Reduce their numbers to a shrill minority in the House and Senate and forfeit the Presidency to the Democrats for the foreseeable future.

Why am I so glum about the results of the bill? Changing the subsidy to a tax credit is a positive step, one that Republicans have supported for years, but the range of tax credits, $2,000 to $4,000, and the method of doling them out, is a disaster. First, the tax credit amounts are ridiculously low. John McCain’s 2008 health reform plan was better than that, and I thought that was a bit low at the time; $5000 for families and $2,500 for individuals. Also, the amounts are more based on age rather than income. There may be a rationale for that, but the Republicans in the House have not attempted to explain why basing tax credits on age will be more helpful to people than basing them on income. The average family employer insurance plan cost for 2015 was $ 17,322.00. To buy an equivalent plan on the individual insurance market, the tax credit should be anywhere from a third to half of that (to provide somewhat equal equivalence to the employee cost that employer plans have); way more than the Republican bill is offering.

The other issue is Medicaid. Changing Medicaid from an entitlement to a block grant is probably the single most important long term feature of this bill, and one that does the longest term good. However, depending on where you get your estimates, more than 84% of the increase in health insurance coverage is due to Obamacare’s increase in Medicaid expansion coverage. That’s coverage that, to the recipient, is free, with no premiums or co-pays. Almost 12 million people will lose the Medicaid Expansion coverage over time. To offer them a replacement of a $2, 000 tax credit (with no mandate to force coverage) will leave a result that almost all of those people will lose coverage and not get a replacement plan.

However in terms of media coverage, the GOP elephant in the room has been pre-existing conditions. The way the House bill handles pre-existing conditions is described in Time this way:

“The American Health Care Act stipulates that states can allow insurers to charge people with pre-existing conditions more for health insurance (which is banned under the ACA) if the states meet certain conditions, such as setting up high-risk insurance pools. Insurers still cannot deny people coverage outright, as was a common practice before the ACA’s passage, but they can hike up premiums to an unaffordable amount, effectively pricing people out of the market.”

So if you have a pre-existing condition, your health care costs are likely to go up, even though you’ll still be able to purchase insurance. We are currently in an Obamacare death spiral; a death spiral which probably represents a good portion of the Obamacare exchange market. Next year it will be worse. So in this way at least, things are likely to continue under the House bill the same way they are currently under Obamacare-higher prices and fewer choices.

Of course there is an answer to the Pre-existing conditions conundrum, one I touched on back in 2012 during the Obamacare discussions. But I think that’s probably an entire post on its own, so stay tuned…

So to summarize, the House bill is an unworkable mess as currently written and is less a repeal and replace than an optional opt out of Obamacare, while taking away the features of Obamacare. So Congress is keeping the Obamacare rules and regulations, but taking away the features that made them workable. States can opt out of those requirements, but Medicaid Expansion is going away anyway. If you have a pre-existing condition, you may be no worse off, but certainly no better, than if we do nothing and let Obamacare death spiral into the ground.

Some reform.

Ultimately, none of this will probably matter. The Senate is likely to so alter the bill that it will be unrecognizable. But the struggle and fight over the House bill is a precursor to the fight in the Senate.

The collapse of Ryan Care was probably the first big failure of the young Trump administration (not counting the tweets-4D chess and all that). And to that, as on many things, I’m of two minds. For all of its flaws, being able to block grant Medicaid funds to the states and capping its growth would be a major victory; a major reform of a major entitlement program. Just that would have been a major administration accomplishment.

On the other hand…the bill was seriously flawed in virtually every other way and didn’t meet the President’s goal of providing coverage for everyone. And even worse than the flaws of the bill, it revealed how amateurish the Republican House was. It was like they had not even considered the idea of writing a health care bill until a few weeks ago. And when they did, they repeated every bad Democratic mistake in doing it by keeping the bill writing secret to exclude… not Democrats but the real enemy; other Republicans. And in fact, it was Republicans that ultimately killed their own reform plan. Democrats just had to sit by and eat popcorn.

This of course, is yet another example of why the GOP has the amply deserved moniker of the stupid party. Democrats usually have a handy bill just sitting on the hard drive of Democratic Congressional servers just waiting for a crisis. You know, so they cannot waste it. School shooting? Just hit print and run out to the House floor waving a fully written Gun Control bill, “for the children.”

With Republicans, after passing multiple repeal bills during the Obama years, including having a full replacement bill in committee in 2013, the Options Act, suddenly became the proverbial deer in the headlights; “Wait we won? That wasn’t supposed to happen!”

So after thinking that the GOP had at least a draft of a consensus plan tucked away waiting for its own opportunity, it soon became obvious that there had probably been not a single meeting or discussion on it until recently. So after crafting a bill in secret with zero input from any effected groups, it turned out there was no constituency for the bill. Even the late lamented Options Act had buy in from several conservative think tanks, and Tea Party groups. No conservative groups even had a peek at it until it was unveiled.

Sorry, but that’s not how you do things.

But…none of that was the “one thing” that Ryan Care taught me.

Have you ever noticed that you never hear the left clamoring for Medicaid for all? Since Medicaid has no premiums, co pays, or deductibles, it’s truly free healthcare (from the consumer point of view). Meanwhile regular Medicare has an 80/20 cost share. Medicaid has lower provider reimbursement rates than Medicare so in theory it should be cheaper. Why shouldn’t the left/liberals/Democrats like Medicaid as the basis of a national healthcare plan over Medicare?

The other day I was on a forum discussing the late, unlamented Ryan plan, and how it weans off Medicaid funds to the states with a different formula over the years. Some left leaning poster complained that means the states would have to raise taxes to make up the difference! Well duh, but if you’re liberal, shouldn’t that be a feature rather than a bug? Don’t those guys love taxes, the higher the better? How could increasing taxes be a flaw in a health care reform plan if you’re liberal?

Epiphany time. Unlike Medicare, which is fully federally funded, states have to pitch in for the cost (not counting the expanded Obamacare version) for Medicaid. Medicare, or any fully federal plan is paid for by deficit spending, so no one is really paying for it (yet) but the states have to tax real money to pay for things like expanding healthcare for people in their own state. That’s why even the bluest states don’t have their own universal healthcare plans. Vermont tried to do it and spent three years trying to make it work before abandoning it because of taxes. California is attempting to do it now, and the lessons of its attempt on this regard will be instructive. I’m not sure any state can afford both a 50 billion dollar bullet train to nowhere and single payer health insurance.

So the lesson? That’s how you defang the left: Make them pay for it. A Balanced Budget Amendment would do more to rein in the Democratic Party than any comparative cluster of policy reforms that will be undone by the next Democratic administration. The basic tools in the Congress and in statehouses across the country are all there to make it happen. Democrats love the rhetoric of raising taxes on the rich but the reality is that the rich are much of their constituency, and it’s not clear how far that constituency is willing to go if every single thing the Democrats want they had to pay for up front.